Officials: Oil Bidders Not Detailed
Thursday, October 12th 2000, 12:00 am
News On 6
WASHINGTON (AP) â€” In a rush to release emergency oil, the Energy Department failed to make even rudimentary checks on some of the successful bidders â€” offering millions of barrels of oil to several one-man operations with little experience handling large amounts of oil.
Some of these small companies â€” including one that operates out of a New York City apartment and another just recently incorporated in Florida â€” were reported to be having trouble obtaining last-minute financial backing to sew up the deals.
A failure to get the required letters of credit this week could force the Energy Department to reopen some of the bids, preventing the release of all 30 million barrels of oil from the government's emergency stocks before the end of November as planned, department officials said.
President Clinton on Sept. 22 ordered the release, under a ``swap'' arrangement, of 30 million barrels of oil from the Strategic Petroleum Reserve to ease tight supplies before winter. The Energy Department announced Oct. 4 the names of 11 companies that would take the oil.
But the selection of several of the bidders has astonished some within the oil industry and prompted a call for a congressional investigation into the bidding process and whether it is primarily benefitting oil speculators.
On Wednesday, Sen. Frank Murkowski, R-Alaska, chairman of the Senate Energy Committee, demanded the Energy Department provide detailed information about how the bids were selected and explain why it selected a number of companies that ``had no experience in refining oil or even getting products to market.''
Robert Kripowicz, the Energy Department's acting assistant secretary for fossil fuels, acknowledged in an interview that little was known about several of the companies when their bids were selected.
These included three companies that would receive a total of 10 million barrels â€” a third of the total â€” worth more than $334 million at current prices, although they were essentially one-man operations not widely known within the petroleum industry.
``We wanted to get the bids out quickly. ... We didn't prequalify any bidders,'' he said.
Kripowicz said in each of the three cases the department gave heavy weight to information from other oil traders and industry representatives who said they were ``in serious discussions'' with the small companies to purchase the government oil from them.
He emphasized that none of the deals would be final, or any oil released, until the bidders produced a letter of credit from a third party guaranteeing the full value of the oil.
Several of the companies were still seeking out the required financial backing on Wednesday, according to Kripowicz.
The second largest award of oil at the Oct. 4 bid selection â€” after the 6 million barrels that went to Marathon Ashland Petroleum â€” went to a company called Lance Stroud Enterprises of New York City, which bid for 4 million barrels worth $133 million at current market price.
It turns out the company operates out of a Manhattan apartment that the owner and company namesake reportedly shares with his mother. Attempts to contact Stroud were unsuccessful Wednesday. His telephone number was listed as unpublished.
Kripowicz said he did not know that Lance Stroud Enterprises was a one-man operation run out of an apartment, nor that a second bidder, Burhaney Energy Enterprises of Tallahassee, Fla., had only been incorporated for two months with little experience in the oil business.
A third bidder, Euell Energy Resources, describes itself on its Web page as ``a full service energy corporation'' but has only a small number of employees at its offices near Denver.
Burhaney Energy and Euell Energy Resources each received 3 million barrels.
Burhaney Energy's Aug. 21 incorporation paper in Florida, a copy of which was obtained by The Associated Press, describes the company's purpose as ``energy marketing and personnel recruitment'' and lists Ronald Peek as its agent and incorporator.
Peek's telephone number is unpublished. The company is not listed in the Tallahassee information directory and a number listed on the incorporation paper rings on an answering machine.
Several attempts to reach Euell's chairman and founder, Renard Euell, were unsuccessful. He did not return telephone messages Wednesday. An employee at the company's office said no one was available to speak about the oil bids.
Euell told Dow Jones Energy Service that he has been in the energy business for 30 years and that he wants to sell the oil to East and West Coast refineries.
On the Web:
Euell Energy Resources site: http://www.euellenergy.com
Energy Department site: http://www.doe.gov